Scottrade (TD ameriTrade) vs Vanguard

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taxi22
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Scottrade (TD ameriTrade) vs Vanguard

Post by taxi22 » Sun Feb 04, 2018 9:47 pm

This is my first post so please be gentle. I am 32 single female. I started a Roth IRA with Scottrade when I was 27, with no clue about investing. Over the years, I have invested in individual stocks, ETFs, and mutual funds. My portfolio is really messy, so won't even attempt to show it here. I have about 40k total in my account. I want to consolidate and re-evaluate my portfolio. I am looking into a 3 or 4 mutual fund portfolio. A lot of the schwab funds are available at no cost, so I was thinking of getting SWTSX, SWISX, and SWAGX.

My question is, should I switch my brokerage too? For longterm, is there an advantage in switching to, say Vanguard? I do like some of the vanguard and fidelity funds, especially for there expense ratios.

Since I am going to be doing a lot of transactions, this seems like the right time to think about it. I like Scottrade overall. I haven't had any issues with them. They are merging with TD Ameritrade, so don't know how that will be.

These forums are been a wealth of information. Thanks!!

student
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by student » Mon Feb 05, 2018 12:02 am

If you are looking for a good brokerage, any of the big one is fine. I would suggest you stay with TD Ameritrade for now, read up on investing and then make a decision.

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brother7
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by brother7 » Mon Feb 05, 2018 1:02 am

I recommend sticking with mutual funds and ETFs and avoiding individual stocks.

If you're convinced that a 100% mutual fund/ETF portfolio is the way to go, then go with Vanguard.
If you want to incorporate individual stocks in your portfolio, I recommend Schwab. I also like Fidelity but I like the fact that the Schwab family of funds have $1 minimums and are also very good funds with low ERs.

The older I get, the more I realize that I could have gone my entire life investing in mutual funds only, avoiding individual stocks altogether. You should reflect on that a bit before you decide the right strategy for you.

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taxi22
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by taxi22 » Mon Feb 05, 2018 1:37 am

brother7 wrote:
Mon Feb 05, 2018 1:02 am
I recommend sticking with mutual funds and ETFs and avoiding individual stocks.

If you're convinced that a 100% mutual fund/ETF portfolio is the way to go, then go with Vanguard.
If you want to incorporate individual stocks in your portfolio, I recommend Schwab. I also like Fidelity but I like the fact that the Schwab family of funds have $1 minimums and are also very good funds with low ERs.

The older I get, the more I realize that I could have gone my entire life investing in mutual funds only, avoiding individual stocks altogether. You should reflect on that a bit before you decide the right strategy for you.
student wrote:
Mon Feb 05, 2018 12:02 am
If you are looking for a good brokerage, any of the big one is fine. I would suggest you stay with TD Ameritrade for now, read up on investing and then make a decision.
Thank you both for your advice.

I do plan to sell most of my individual stocks (except maybe AMZN AND MSFT, and those positions are very small). I am leaning towards all mutual funds, just because with ETFs I will have transactions fees and dividends/capital gains that won't automatically be reinvested.

I have a hodgepodge of Schwab, Vanguard and fidelity funds/ETFs right now. I am going to TRY to sort it out without making a even bigger mess. Thanks again!

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ruralavalon
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by ruralavalon » Mon Feb 05, 2018 8:35 am

Welcome to the forum :) .

taxi22 wrote:
Sun Feb 04, 2018 9:47 pm
This is my first post so please be gentle. I am 32 single female. I started a Roth IRA with Scottrade when I was 27, with no clue about investing. Over the years, I have invested in individual stocks, ETFs, and mutual funds. My portfolio is really messy, so won't even attempt to show it here. I have about 40k total in my account. I want to consolidate and re-evaluate my portfolio. I am looking into a 3 or 4 mutual fund portfolio. A lot of the schwab funds are available at no cost, so I was thinking of getting Schwab Total Stock Market Index Fund SWTSX, Schwab International Index Fund SWISX, and Schwab U.S. Aggregate Bond Index Fund SWAGX.
Those are the better choices from Schwab for a comprehensive mutual fund line-up in your Roth IRA.

The international fund covers only stocks of larger companies, only in developed markets except Canada.

If you move the Roth IRA to Vanguard or Fidelity, both have a total international stock index fund which covers stocks of both larger and smaller companies in both emerging and developed markets including Canada.

taxi22 wrote:My question is, should I switch my brokerage too? For longterm, is there an advantage in switching to, say Vanguard? I do like some of the vanguard and fidelity funds, especially for there expense ratios.

Since I am going to be doing a lot of transactions, this seems like the right time to think about it. I like Scottrade overall. I haven't had any issues with them. They are merging with TD Ameritrade, so don't know how that will be.

These forums are been a wealth of information. Thanks!!
It is my understanding that TDAmeritrade will no longer offer commission free access to Vanguard ETFs. I think that you will have to pay a fee to buy Vanguard or Fidelity mutual funds.

It's very important to avoid extra fees and commissions, and very important to use broadly diversified funds with low expense ratios.

I assume by "brokerage" you mean a taxable account. Is that correct? How large is the account?

I think it's better to move the account to Vanguard or Fidelity, for no fee access their low expense, broadly diversified index funds. My personal preference is Vanguard, it has by far the largest selection of low expense ratio mutual funds offered anywhere.

I agree that it's easier to use mutual funds, rather than ETFs, because it's easier to do automatic investment, and easier to do automatic reinvestment of dividends and gains.

Why do you say that are you "going to be doing a lot of transactions"?

Do you have substantial unrealized capital gains in this account? Are the gains long-term or short-term?

What is your tax bracket, both federal and state?

You can simply add new information to your original post using the edit button, so that all of your information is in one place.

Once you decide on what to sell and what to keep, and decide where you want the account to be, then ask both the old firm and the new firm what it will charge to sell the investments. Then sell before or after the transfer of the account depending on where it is cheaper.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

neilpilot
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by neilpilot » Mon Feb 05, 2018 1:17 pm

ruralavalon wrote:
Mon Feb 05, 2018 8:35 am

I agree that it's easier to use mutual funds, rather than ETFs, because it's easier to do automatic investment, and easier to do automatic reinvestment of dividends and gains.
All of my investments are in Vanguard MFs and ETFs, and all accounts except HSA are with Scottrade and Merrill Edge. As I've rebalanced in 2017, and during a recent allocation change from 70% to 50% equity, I've moved away from mutual funds into ETFs.

I have all of my ETFs set to automatically reinvest both gains and dividends with both Scottrade and ME. There has been no transaction cost for these reinvestments, although I can't comment on if this will change when the Scottrade accounts become TDA at the end of the month.

BTW I understand that TDA will grandfather the current mutual fund transaction fees for former Scottrade accounts (TDA's commission on mutual funds is significantly higher).

dave1054
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by dave1054 » Mon Feb 05, 2018 2:04 pm

At 32 years old, please take some advise from an older guy who has made all the mistakes. At your age, you should be at least 80% in stocks. Schwab and TD Ameritrade is fine. Index funds with Schwab have very similar expense ratios with Vanguard.

Put 50-60% in US Total Index and 20-30% in international Index.
I suspect from your questions that you are concerned with recent market drop. At your age, you should hope the market crashes. I hope you understand this concept.

Above all, keep it simple and forget about it and go out an enjoy life.

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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by Jack FFR1846 » Mon Feb 05, 2018 2:30 pm

If you plan to invest in Schwab funds, why not move to Schwab?

I have Schwab and TDAmeritrade. I invested in VTI at TDA and that's no longer a NTF option. There's always a chance that they remove Schwab funds from the NTF platform. If you hold them at Schwab, there's far less chance that this might happen.
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Topic Author
taxi22
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by taxi22 » Mon Feb 05, 2018 4:59 pm

ruralavalon wrote:
Mon Feb 05, 2018 8:35 am
Welcome to the forum :) .


It is my understanding that TDAmeritrade will no longer offer commission free access to Vanguard ETFs. I think that you will have to pay a fee to buy Vanguard or Fidelity mutual funds.

It's very important to avoid extra fees and commissions, and very important to use broadly diversified funds with low expense ratios.

I assume by "brokerage" you mean a taxable account. Is that correct? How large is the account?
I meant my Roth IRA institution. Sorry for the confusion. I didn't even know that commission free ETFs even existed so thanks for that info!
ruralavalon wrote:
Mon Feb 05, 2018 8:35 am
I think it's better to move the account to Vanguard or Fidelity, for no fee access their low expense, broadly diversified index funds. My personal preference is Vanguard, it has by far the largest selection of low expense ratio mutual funds offered anywhere.

I agree that it's easier to use mutual funds, rather than ETFs, because it's easier to do automatic investment, and easier to do automatic reinvestment of dividends and gains.

Why do you say that are you "going to be doing a lot of transactions"?
I have quite a few individual stocks and ETFs in my IRA that I will be getting ride of to simplify things. Thus I will have quite a few transactions. I will probably do this over this year, depending on how the market is.
ruralavalon wrote:
Mon Feb 05, 2018 8:35 am
Do you have substantial unrealized capital gains in this account? Are the gains long-term or short-term?

What is your tax bracket, both federal and state?

You can simply add new information to your original post using the edit button, so that all of your information is in one place.

Once you decide on what to sell and what to keep, and decide where you want the account to be, then ask both the old firm and the new firm what it will charge to sell the investments. Then sell before or after the transfer of the account depending on where it is cheaper.
Thanks ruralavalon! All of this is in the Roth IRA so not really worried about taxes or capital gains.

Topic Author
taxi22
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by taxi22 » Mon Feb 05, 2018 5:08 pm

dave1054 wrote:
Mon Feb 05, 2018 2:04 pm
At 32 years old, please take some advise from an older guy who has made all the mistakes. At your age, you should be at least 80% in stocks. Schwab and TD Ameritrade is fine. Index funds with Schwab have very similar expense ratios with Vanguard.

Put 50-60% in US Total Index and 20-30% in international Index.
I suspect from your questions that you are concerned with recent market drop. At your age, you should hope the market crashes. I hope you understand this concept.

Above all, keep it simple and forget about it and go out an enjoy life.
Thanks for the advice! I am 85/15 right now. Not worried about the market going up or down too much, I am mostly concerned about my messy portfolio. For some reason I thought it was a good idea to just buy stocks and ETFs that "looked" good and keep them in my portfolio indefinitely. I've done ok with the market so far, but lets be real it was hard NOT to do well in the market last couple of years. So now I'm trying to keep it simple and make more informed decisions.

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ruralavalon
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by ruralavalon » Mon Feb 05, 2018 5:27 pm

taxi22 wrote:
Mon Feb 05, 2018 4:59 pm
Thanks ruralavalon! All of this is in the Roth IRA so not really worried about taxes or capital gains.
Great, that means it will be much simpler to make the changes you want and consolidate to a simpler three-fund type portfolio.

I still suggest rolling over the Roth IRA to a low cost mutual fund provider like Vanguard or Fidelity. I still suggest using mutual funds rather than ETFs. Both Vanguard and Fidelity offer a total international stock index fund which is more diversified than the Schwab International Index Fund (SWISX).

I personally prefer Vanguard because it has by far the largest selection of low expense ratio mutual funds available anywhere.

After deciding which fund company you want to transfer to, ask both the old and new company how much they will charge to sell your old investments, and then sell before or after the account rollover depending on which will charge less. Have the new fund company handle the transferring of the Roth IRA account, ask for a "trustee to trustee" rollover.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

khangaroo
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by khangaroo » Mon Feb 05, 2018 6:24 pm

I was in your same exact situation a few months ago with a Scottrade Roth IRA with a hodgepodge of different stocks, mutual funds, and indexes. I was contemplating on moving the account over to Vanguard since I was going to follow the 2-3 Fund Portfolio and it would've been free commissions on Vanguard purchases.

I decided not to for the following reasons:
- Familiarity/Loyalty. I've been using Scottrade since I was 16 and now I'm 29. It's an easy to use interface and I have all my historical data there as well. I have a total of 3 accounts with them. Every time I had to contact customer service they've been very helpful. Hoping these items will stay the same with the switch.
- Low purchasing frequency. I buy stocks once a year in my Roth IRA when I maximize the contribution and the same with my ESA therefore the free commissions wasn't that big of an incentive - I'll take the $32/year hit for commissions.
- If it ain't broke, don't fix it/Laziness. I had no issue with Scottrade so I didn't see the need to switch for a few bucks saved each year.

Ultimately I spent $85 on trading fees to get my portfolio down to 2 funds. It would be nice to get another reduction in the expense ratio for having Vanguard Admiral Shares but that goes back to my stubbornness and laziness to switch. If the TD merger proves to be troublesome then I'll most likely switch but the hassle factor vs Vanguard benefits was not enough for me to move over.

Topic Author
taxi22
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Re: Scottrade (TD ameriTrade) vs Vanguard

Post by taxi22 » Mon Feb 05, 2018 9:35 pm

khangaroo wrote:
Mon Feb 05, 2018 6:24 pm
I was in your same exact situation a few months ago with a Scottrade Roth IRA with a hodgepodge of different stocks, mutual funds, and indexes. I was contemplating on moving the account over to Vanguard since I was going to follow the 2-3 Fund Portfolio and it would've been free commissions on Vanguard purchases.

I decided not to for the following reasons:
- Familiarity/Loyalty. I've been using Scottrade since I was 16 and now I'm 29. It's an easy to use interface and I have all my historical data there as well. I have a total of 3 accounts with them. Every time I had to contact customer service they've been very helpful. Hoping these items will stay the same with the switch.
- Low purchasing frequency. I buy stocks once a year in my Roth IRA when I maximize the contribution and the same with my ESA therefore the free commissions wasn't that big of an incentive - I'll take the $32/year hit for commissions.
- If it ain't broke, don't fix it/Laziness. I had no issue with Scottrade so I didn't see the need to switch for a few bucks saved each year.

Ultimately I spent $85 on trading fees to get my portfolio down to 2 funds. It would be nice to get another reduction in the expense ratio for having Vanguard Admiral Shares but that goes back to my stubbornness and laziness to switch. If the TD merger proves to be troublesome then I'll most likely switch but the hassle factor vs Vanguard benefits was not enough for me to move over.
Thanks this helps a lot. I like scottrade, especially since they are a office near me. I just wish I had started thinking about moving stuff around sooner, when the markets where calm. I'll see how TD AmeriTrade is and then decide.

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